CIBN Financial Accounting
Past Questions
30+ verified Financial Accounting past questions for CIBN. Step-by-step worked answers in 5 Nigerian languages.
Financial Accounting topics (2)
Sample Financial Accounting past questions
1. Bank reconciliation matches cash book to:
- A. Customer ledger
- B. Bank statement
- C. Trial balance
- D. P&L
Answer: B
2. Unpresented cheques are:
- A. Issued but not yet cleared
- B. Cleared cheques
- C. Forged cheques
- D. Cancelled cheques
Answer: A
3. Bank charges in the cash book are:
- A. Credit entries
- B. Debit entries
- C. Income
- D. Liabilities
Answer: B
4. Direct debit reduces:
- A. Bank balance
- B. Income
- C. Stock
- D. Capital
Answer: A
5. A bank reconciliation statement reconciles the cash book with the:
- A. Income statement
- B. Bank statement
- C. Trial balance
- D. Ledger
Answer: B
6. Assets minus liabilities equals:
- A. Revenue
- B. Equity
- C. Expenses
- D. Profit
Answer: B
7. Interest received by a bank is recorded as:
- A. Expense
- B. Income
- C. Liability
- D. Asset
Answer: B
8. The fundamental accounting equation is:
- A. Assets = Liabilities − Equity
- B. Assets = Liabilities + Equity
- C. Equity = Assets + Liabilities
- D. Assets + Equity = Liabilities
Answer: B
AI Explanation
Assets = Liabilities + Equity. Every double-entry maintains this balance.
9. Which is a current asset?
- A. Goodwill
- B. Buildings
- C. Trade receivables
- D. Long-term loan
Answer: C
AI Explanation
Current assets are realised within 12 months. Trade receivables (debtors) are short-term claims.
10. Under accrual accounting, expenses are recognised when:
- A. Cash is paid
- B. Incurred, regardless of payment timing
- C. The year ends
- D. An audit is done
Answer: B
AI Explanation
Accruals concept: expenses are matched to the related revenue and recognised when incurred, not when paid.
11. Prudence principle requires that:
- A. Profits be overstated
- B. Assets/revenue not be overstated; liabilities/expenses not be understated
- C. All items be ignored
- D. Cash basis is used
Answer: B
AI Explanation
Prudence is caution under uncertainty: don't overstate gains/assets; don't understate losses/liabilities.
12. A debit entry increases:
- A. Liabilities
- B. Income
- C. Assets and expenses
- D. Capital
Answer: C
AI Explanation
Debits increase Assets and Expenses. Credits increase Liabilities, Equity and Income.
13. A trial balance is:
- A. A formal financial statement
- B. A list of all ledger balances at a date — checks debits = credits
- C. A budget
- D. A bank reconciliation
Answer: B
AI Explanation
Trial balance lists all general-ledger balances; debits must equal credits — arithmetic accuracy check.
14. Depreciation is BEST described as:
- A. A cash outflow
- B. Systematic allocation of an asset's cost over its useful life
- C. Market-value revaluation
- D. Impairment loss
Answer: B
AI Explanation
Depreciation allocates the depreciable amount (cost − residual value) over useful life — a non-cash expense.
15. Straight-line depreciation of a machine costing ₦500,000, residual ₦50,000, useful life 5 years:
- A. ₦100,000/year
- B. ₦90,000/year
- C. ₦110,000/year
- D. ₦50,000/year
Answer: B
AI Explanation
(500,000 − 50,000) ÷ 5 = ₦90,000 per year.
16. Closing inventory under IAS 2 should be valued at:
- A. Cost only
- B. Net realisable value only
- C. Lower of cost and NRV
- D. Higher of cost and NRV
Answer: C
AI Explanation
IAS 2: lower of cost and NRV — applies prudence and prevents asset overstatement.
17. Bad debts written off in the period are charged to:
- A. Statement of changes in equity
- B. Statement of profit or loss
- C. Statement of financial position only
- D. Cash flow only
Answer: B
AI Explanation
Bad debts and changes in allowance for doubtful debts are recognised as P&L expense.
18. Bank reconciliation explains the difference between:
- A. Two trial balances
- B. Cash book balance and bank statement balance at a date
- C. Sales and purchases
- D. Budget and actual
Answer: B
AI Explanation
Reconciles the entity's cash-book balance to the bank statement, identifying timing differences and errors.
19. An unpresented cheque in a bank reconciliation should be:
- A. Added to the bank statement balance
- B. Deducted from the bank statement balance to reach cash-book balance
- C. Ignored
- D. Reversed in the cash book
Answer: B
AI Explanation
Bank-side: bank balance − unpresented cheques + uncredited lodgements = cash-book balance.
20. Drawings by a sole proprietor are:
- A. An expense in the income statement
- B. A reduction of equity
- C. An increase of liability
- D. Revenue
Answer: B
AI Explanation
Drawings reduce the owner's capital. They are not P&L items but appear in equity/capital reconciliation.
21. A 'contra' entry in a cash book:
- A. Moves money between cash and bank within the business
- B. Records a sale
- C. Records a bad debt
- D. Records a purchase return
Answer: A
AI Explanation
Contra entries record movements between cash and bank columns (e.g. depositing till cash to bank).
22. Accrued expenses are:
- A. Paid in advance
- B. Incurred but unpaid at year-end
- C. Recoverable expenses
- D. Non-deductible
Answer: B
AI Explanation
Accrued expenses (e.g. unpaid wages at year-end) are recognised under accruals — Dr expense / Cr accruals.
23. A prepayment is:
- A. Cash received in advance
- B. Cash paid before the period it relates to
- C. A bad debt
- D. Loss on disposal
Answer: B
AI Explanation
Prepayment (prepaid expense) is cash paid before benefit received — current asset until consumed.
24. Closing inventory increase will:
- A. Reduce gross profit
- B. Increase gross profit
- C. Have no effect
- D. Increase liabilities
Answer: B
AI Explanation
Higher closing inventory lowers cost of sales (Opening + Purchases − Closing), so gross profit rises.
25. Discount allowed is:
- A. An expense in profit or loss
- B. Income in profit or loss
- C. A revenue
- D. A reduction in capital
Answer: A
AI Explanation
Discount allowed (to customers) is an expense; discount received (from suppliers) is income.
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